Originally Posted by newyorkgeorge

DL also announced deeper cuts and one can probably assume that UA, CO, and USAir will be next. WN has also indicated that further cuts might be in order. The oil crisis is now replaced by the pax load crisis, for the legacy carriers in particular lucrative premium paid international travel.

However, there are two issues to be considered. First, the airline business has huge fixed costs so there is only so much shrinkage that an airline can do to hopefully return to profitability. This includes having a/cs that have lease or debt payments, which of course parking them in desert makes no revenues towards those payments. And with the entire industry in a flux, its not like there is a huge market for used a/c.

Second, is the ability to tap credit markets. In the past, lenders were more than willing to secure every asset in site as a means to provide airlines with the cash needed to keep operating. But in today's credit environment, will there be lenders interested in taking collateral such as spare engine parts or older unencumbered aircraft for security on loans.

Still, I don't see AA marching into bankruptcy court in the near future.